BlackRock’s iShares LifePath Target-Date ETFs are a set of retirement tools that are unique to the ETF industry.
Target-date funds, which have been around for decades, help investors smoothly and seamlessly manage their assets throughout their investing lifecycle and into (and sometimes through) retirement. However, this type of fund has almost exclusively been limited to the mutual fund world, largely accessed through 401(k)s.
That’s a problem for the 42% of American full-time workers who lack access to a 401(k) or employer-sponsored retirement plan, the Economic Innovation Group says. “Coverage is even scarcer for part-time workers, who typically lack access to similar benefits as their full-time peers—79.0% of part-time employees aged 18 to 65 lack access to any retirement plan, 80.4% do not participate in a plan, and 83.2% do not receive an employer match on their retirement savings.”
Target-date exchange-traded funds (ETFs) can accomplish that, offering both low-cost and low-dollar exposure to Americans who don’t have workplace plans, but can still open an IRA, Roth IRA, even a traditional brokerage account.
What to Know About iShares’ LifePath Target-Date ETFs
iShares LifePath Target-Date ETFs invest in a global portfolio of both stock and bond ETFs. (“Global” is a specific term in investing that means international countries and the U.S. “International” means other countries but not the U.S.) Each product starts its life with a riskier, more growth-oriented profile, but over time, it tapers off and becomes more conservative and protection-minded.
According to iShares’ model, the typical target-date ETF will begin with 99% stock exposure at the “start of the career”—effectively, 40 years until the target date—then reduce to 87% stocks by halfway through the cycle, and pare down to just 40% stocks by the time you hit retirement.
You’ll remain invested in equities through retirement, providing added upside potential retirees need to continue growing their nest egg as they start drawing from it.
So, for instance, if you started investing at age 25, and plan on retiring in 2065, you would invest in a 2065 ETF, which would start at 99% stocks and 1% bonds. By the time you’re 45, the ETF will have shifted to 87% stocks and 13% bonds. And by the time you retire, the ETF will have reduced its stock exposure to just 40%, with the remaining 60% in bonds.
iShares launched its LifePath Target-Date ETF line in 2023 with 10 funds—nine actual target-date funds, as well as a 10th ETF meant to be held in retirement. Here’s what the lineup looks like today:
- iShares LifePath Retirement ETF (IRTR), 0.08% expense ratio
- iShares LifePath Target Date 2030 (ITBD), 0.09% expense ratio
- iShares LifePath Target Date 2035 (ITDC), 0.10% expense ratio
- iShares LifePath Target Date 2040 (ITDD), 0.11% expense ratio
- iShares LifePath Target Date 2045 (ITDE), 0.11% expense ratio
- iShares LifePath Target Date 2050 (ITDF), 0.11% expense ratio
- iShares LifePath Target Date 2055 (ITDG), 0.12% expense ratio
- iShares LifePath Target Date 2060 (ITDH), 0.12% expense ratio
- iShares LifePath Target Date 2065 (ITDI), 0.12% expense ratio
- iShares LifePath Target Date 2070 (ITDJ), 0.12% expense ratio
The retirement ETF currently has an overall conservative (but aggressive relative to other similar funds) portfolio that’s 55% invested in bonds and 45% invested in stocks.
We’ll note, as an aside, that iShares’ literature shows that by the time you retire, the funds’ stock/bond blend should be 40/60, so the retirement fund is currently more aggressively positioned than what the company otherwise suggests. However, during previous updates, IRTR was closer to that 40/60 mix, so this may very well just be temporary.
Something else worth noting: There was a 2025 ETF—iShares LifePath Target Date 2025 (ITBA)—but it has been folded into IRTR. This is a common mechanism in target-date series, and it’s a fate that will befall each of the other LifePath ETFs once they reach their target retirement date.
Expenses on these funds range between 0.08% and 0.12%, which means you’ll pay between $8 and $12 annually on a $10,000 portfolio—lower than your average target-date mutual fund. (The fees vary based on the underlying expenses of the ETFs each target-date fund holds.) Additionally, the ETF wrapper tends to be much more tax-efficient than a mutual fund wrapper—not necessarily a concern for those with tax-advantaged accounts like IRAs and Roth IRAs, but helpful for those who only invest through a taxable brokerage account.
Another perk? Because it’s an ETF, there’s no required minimum initial investment. Whereas mutual fund TDFs might require several thousands of dollars to make your first purchase, you can get into LifePath ETFs for the price of a single share (or much less for those with brokerages that allow fractional shares). For instance, right now, iShares LifePath Target Date 2035 ETF shares trade right around $35.
Holdings of these target-date funds include broad iShares ETFs such as the iShares Russell 1000 ETF (IWB), iShares US Treasury Bond ETF (GOVT), and iShares Core MSCI Emerging Markets ETF (IEMG).
iShares points out that the ETFs’ asset allocation is virtually identical to the iShares LifePath mutual target-date funds. However, there are some differences between what underlying ETFs are available for the ETF target-date funds to hold, and what underlying mutual funds are available for the target-date mutual funds to hold.
Related: Beginner’s Guide to Vanguard Target-Date Funds
Another Run at Target-Date ETFs
These LifePath products are the only target-date ETFs on the market.
But they’re not the first.
Todd Rosenbluth, Head of Research at VettaFi, noted on a conference call with BlackRock that “this has existed and it doesn’t exist anymore because there wasn’t demand,” referring to BlackRock’s 2014 closure of its previous target-date ETF line.
Asked what was different now, BlackRock responded that demographics have changed since then, and that the divergence in people who do and do not have access to 401(k) plans has grown. They also cited advancement in ETFs—the previous target-date ETFs were a different structure that mimicked an index, while the new target-date ETF line is actively managed.
“With these, we’re implementing new research every 18 months or so,” BlackRock says.
Related: Beginner’s Guide to Fidelity Target-Date Funds
Who Are These Funds For?
As we mentioned earlier, iShares’ new target-date funds will allow anyone who doesn’t have a 401(k), or who has an IRA that doesn’t permit mutual fund investing, to own a low-cost target-date strategy.
The funds, while actively managed, are still inexpensive (even by ETF standards). They’re sophisticated, yet simple and effective tools that make sense for everyone, from beginners to pros, who understand the value of both diversification and automation.
Among other demographics, this could help younger generations who are both taking an interest in investing (and have more access to the markets) earlier than ever before. While investors in Robinhood and other new investor apps are often derided for their short-term-ism, these new funds provide an outlet for those who do believe in building wealth over time and want a steady hand to guide their longer-term investments.
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